Starknet Plans to Bridge Bitcoin and Ethereum to Expand DeFi Access

Highlights:

• Starknet aims to scale Bitcoin by increasing transactions per second and improving the experience of users with lower fees.
• Xverse and Starknet will integrate in 2025 to bring decentralized finance applications to Bitcoin users.
• Starknet plans to use OP_CAT and BitVM to enable smart contracts and expand its financial use.

Ethereum Layer 2 solution Starknet plans to add Bitcoin as an integrated feature within its network. Starknet plans to use Bitcoin and Ethereum as a settlement layer. The move will unify the two largest blockchains on a single layer. The Starknet Foundation introduced its Bitcoin roadmap to the public during a presentation on March 11. The plan detailed the process of transforming Starknet into Bitcoin’s operational platform.

BREAKING: Starknet unveils plans to be the first Layer 2 network settling transactions on Bitcoin & Ethereum, uniting ecosystems with STARK tech by Q2 2025—scaling BTC to thousands of TPS! #Starknet #Bitcoin #Ethereum #DeFi

— CryptoMarketControl (@CryptoMarketCon) March 12, 2025

The integration project aims to increase the transaction capacity of Bitcoin and reduce blocks and gas fees. If the plan becomes successful, it will allow developers to build apps on the Bitcoin network through smart contracts.

Bitcoin’s network has long struggled with limited programmability, which prevents it from supporting DeFi applications. Most Bitcoin remains in wallets and exchanges because of these restrictions. The Starknet platform intends to expand Bitcoin capabilities through smart contracts to enable enhanced interaction between users. According to the foundation, Bitcoin needs to have a function beyond its current role as a store of value.

Starknet envisions OP_CAT as a primary component of its Bitcoin upgrade, which gives users control over their Bitcoin spending conditions. The addition of zero-knowledge proofs through this feature would make transactions more secure while requiring less exposure of confidential data. Starknet will adopt BitVM and other alternatives as stand-in solutions until OP_CAT receives approval.

Bitcoin can execute smart contract logic through this verification method and still maintain the integrity of its base layer. The temporary solutions will maintain the connection between Bitcoin and Starknet until OP_CAT is activated.

Xverse Wallet and Starknet Partnership for Bitcoin DeFi

Starknet has established a partnership with Bitcoin Web3 wallet Xverse to facilitate Bitcoin integration into DeFi. The partnership established by Starknet seeks to enable Bitcoin users to easily access decentralized finance platforms through its ecosystem. Xverse CEO Ken Liao has expressed his vision to transform wallets from basic storage tools into portals that access Bitcoin utility expansion. The new integration will be available during the second quarter of this year.

Ethereum co-founder Vitalik Buterin has expressed support for Bitcoin Layer 2 solutions. During a discussion on March 11, he stressed that implementing trustless asset transfers should exist between Bitcoin and Ethereum. According to Buterin, Bitcoin was designed to function as a peer-to-peer electronic cash system, but ongoing scalability challenges have constrained its potential.

Starknet on Bitcoin and Ethereum https://t.co/tCyQDHY7Yr

— StarkWare (@StarkWareLtd) March 11, 2025

Buterin noted that the Lightning Network is facing challenges because of its limited liquidity and network routing problems. According to Buterin, a secure Bitcoin Layer 2 protocol would create better efficiency for digital payments.

Challenges That Lie Ahead

The implementation of a single execution layer through Starknet seeks to deliver unified integration of both BTC and ETH, which will reshape blockchain system positions. The success of the initiative depends on OP_CAT’s approval since its future remains uncertain. Starknet and Xverse remain active in developing different approaches to implement DeFi on Bitcoin while avoiding requirements for immediate protocol modifications.